Sebi under fire: Parliamentary committee to scrutinise regulator amid controversy

The Securities and Exchange Board of India (SEBI) is facing heightened scrutiny as the Public Accounts Committee (PAC) has decided to include a review of the regulator's performance in its agenda. This move comes in response to serious allegations made against Sebi's Chairperson, Madhabi Puri Buch, by the US-based firm Hindenburg Research. The committee, led by senior Congress leader K C Venugopal, is expected to summon Buch for questioning regarding these claims as detailed in a report by Indian Express.

Allegations of offshore investments

The controversy erupted when Hindenburg Research alleged that both Madhabi Buch and her husband, Dhaval Buch, held stakes in obscure offshore entities linked to the Adani Group's alleged money siphoning scandal. The allegations have sparked a wave of political outrage, with opposition parties calling for a parliamentary probe into the matter. The Public Accounts Committee (PAC) has taken the unusual step of including a review of regulatory bodies established by Act of Parliament in its agenda, a move that has not been seen in recent years.

In response to the allegations, the Buch's issued a joint statement clarifying that their investment in the fund mentioned in the Hindenburg report was made in 2015, prior to Madhabi's appointment as a Whole Time Member of Sebi in 2017 and her subsequent elevation to Chairperson in March 2022. They emphasised that all disclosures and recusal norms have been diligently followed as per Sebi's code of conduct.

Calls for accountability

The growing calls for accountability come as the Congress party held nationwide protests last month, demanding Buch's resignation from her position. The PAC, which is expected to meet several times this month, aims to address the pressing issues surrounding Sebi's governance and effectiveness in protecting investor interests.

The committee's next meeting is scheduled for September 10, where it will discuss various subjects, including a performance audit of the National Rural Drinking Water Programme. However, the inclusion of Sebi's review reflects a significant shift in focus towards regulatory oversight, highlighting the importance of maintaining public trust in financial institutions.

Sebi's role and future implications

As the primary regulator of the securities market in India, Sebi plays a crucial role in ensuring transparency and safeguarding investor interests. The upcoming review by thePublic Accounts Committeepresents an opportunity for Sebi to address the concerns raised and reaffirm its commitment to effective regulation.

The implications of this scrutiny are significant, not only for Sebi but also for the broader financial landscape in India. As the market continues to evolve, the need for a robust and responsive regulatory framework is paramount. The outcome of the committee's review will likely shape the future direction of Sebi and its ability to navigate the complexities of modern financial markets.

Hence, the Public Accounts Committee's decision to review Sebi's performance amid serious allegations against its chairperson underscores the critical need for accountability and transparency in India's financial regulatory framework. As the situation unfolds, all eyes will be on the committee's findings and the potential impact on the regulator's operations and reputation.